Study Finds Lax Antitrust Enforcement Leads to Higher Hospital Care Prices

The recent study published in the journal American Economic Review: Insights has shed light on the impact of lax antitrust enforcement on hospital care prices in the United States. Researchers from the University of Chicago, Harvard University, Yale University, and the University of Wisconsin-Madison analyzed over 1,000 hospital mergers that took place between 2000 and 2020, revealing that only 1% of these mergers were challenged by the Federal Trade Commission (FTC).

According to the study, the lack of antitrust enforcement has led to decreased competition and higher prices for hospital care. Study co-author Zack Cooper, an associate professor of health policy at Yale School of Public Health, emphasized that the underenforcement of antitrust laws in the hospital sector has resulted in significant price increases for consumers.

The researchers found that hospital mergers that were not challenged by the FTC could have been identified using standard screening tools available to the agency. These unchallenged mergers ultimately led to price increases of 5% or more, impacting healthcare spending for the privately insured by $204 million in the year following the mergers.

Furthermore, hospital mergers in rural regions and areas with lower incomes and higher poverty rates experienced more substantial price increases post-merger. The researchers highlighted the impact on outpatient services, noting that regions with fewer freestanding clinics to compete with hospitals were particularly affected.

The study also pointed to underfunding as a contributing factor to the lax antitrust enforcement by the FTC. Study co-author Zarek Brot-Goldberg, assistant professor at the Harris School of Public Policy at the University of Chicago, suggested that the agency may lack sufficient resources to take necessary enforcement action and preserve competition in the healthcare market.

Overall, the study underscores the need for increased antitrust enforcement in the hospital sector to promote competition, protect consumers, and prevent further price increases in healthcare. Researchers emphasized the importance of preserving competition in U.S. hospital markets to address the rising costs of hospital care.